Source: EconLog
by Pierre Lemieux
“‘Fiscal dominance’ refers to the state’s expenditures (fiscal policy) dominating monetary policy. Instead of the legislature (Congress in the US) controlling government expenditures while the central bank (the Fed) tries to control inflation, the latter helps finance expenditures and Congress obtains more leeway to run deficits. Fiscal dominance is the opposite of central bank independence. … One way or another, sooner or later, fiscal dominance will lead to inflation, which is defined as a sustained increase in the price level.” (08/28/25)
https://www.econlib.org/fiscal-dominance-brings-financial-repression